Outsourcing mega-deals back in vogue

Deals with an annual contract value of €80m or more are up by 60 per cent globally this year, new figures reveal

The EMEA outsourcing market is back on song, with a rise in mega-deals driving a sharp hike in activity in the third quarter.

The value of contracts signed in the region in Q3 leapt 14 per cent on the previous quarter, according to Information Services Group's (ISG) TPI Index, which covers commercial outsourcing contracts with an annual contract value (ACV) of €4m (£3.2m) or more.

IT outsourcing was up 40 per cent sequentially to €1.4bn.

Market intelligence firm ISG attributed the increase to a jump in the number of larger contracts, a pattern repeated across the globe.

Globally, the number of "mega-deals" – those which have an annual contract value of more than €80m – is up 60 per cent in 2012 and has already surpassed last year's total. Half of those mega-deals were awarded in EMEA.

Although the Q3 market is 12 per cent down on an "especially robust" Q3 2011, ISG EMEA partner Duncan Aitchison labelled the European market's performance as "impressive".

"Despite trading conditions remaining difficult amid continued economic volatility in the region, we have detected a renewed appetite for outsourcing as this year has progressed," he said.

The UK market is up by one third for the year to date, to €2.4bn, ISG said, although this is mainly down to two large facilities management contracts awarded in the financial services sector.

"Looking ahead to the final quarter of 2012, we expect actual contract values to sustain their upward trajectory, thanks to some larger deals ready to go to award," said Aitchison.